Rising bond yields have pushed TD to raise some medium and long term mortage rates with more increases forecast:
Soaring bond yields have set the stage for a second round of interest rate hikes on residential mortgages in about a week.
After nudging rates higher on longer-term mortgages last Wednesday, Toronto-Dominion Bank yesterday raised borrowing costs on its five-year, fixed-rate loan by 40 basis points to 5.85 per cent, effective today.
Last week, TD and the other banks increased rates on five-year, fixed-rate mortgages by 20 basis points to 5.45 per cent.
While no major competitor had followed TD’s move by late yesterday, experts suggested higher rates are likely inevitable because banks are facing higher borrowing costs on the bond market. Banks tap the bond market to finance mortgages because they lend out more money than they attract through deposits.
So here are some questions for discussion: Mortgage rates are near an all-time low, which means you can still borrow money cheaply and local house prices have dropped more than 10% from their peak. So is now a good time to buy? What happens to prices when mortgage rates go up? Are you saving for a higher down payment in an higher interest rate environment or jumping in now, potentially paying more but with a lower interest rate on the debt? What about buying in non-local markets that have fallen closer to 50% off from their peak?